Extraterritorial Reach of the Lanham Act

Trader Joe’s Company v. Michael Norman Hallatt

The defendant Mr. Michael Hallatt was purchasing products from a Trader Joe’s location in the state of Washington and driving across the border to Canada, where he resold the products in a store with a design that resembled that of a Trader Joe’s location that he called “Pirate Joe’s”.

“The Lanham Act is the federal trademark and unfair competition statute” and allows for a civil actions for imitations of a registered mark. The court then applied a two-step process to determining when foreign conduct was encompassed by the Lanham Act: 1) does the statute provide a clear showing that it applies extraterritorially; and 2) what limits there may or may not be from Congress regarding foreign application of the statute. Effectively, the “use in commerce” element is not jurisdictional and allows for extraterritorial reach. The court then applied the three-prong test from Timberlane to see whether the Act included a proscriptive reach, which ultimately the court said Trader Joe’s met in the present case.

The Timberlane test involves:

1. The defendant infringes upon the trademark such that it has some effect on American foreign commerce;
2. Causes the plaintiff injury under the Lanham Act; and
3. A consideration of international comity that looks at seven factors: a) the degree of conflict with foreign law or policy; b) the nationality or allegiance of the parties and the locations or principal places of business corporations; c) the extent to which enforcement by either state can be expected to achieve compliance; d) the relative significance of effects of the United States as compared with those elsewhere; e) the extent to which there is explicit purpose to harm or affect American commerce; f) the foreseeability of such effect; and g) the relative importance to the violations charged of conduct within the United States as compared with conduct abroad.

Regarding the first prong, the court decided that the key words are “some effect”. This meant that the plaintiff did not need to show a substantial or even a direct effect on American foreign commerce but merely that there was “some effect”. The second prong is a direct application of the statute. Finally, the third prong looks at all the factors, none of which are independently dispositive. In particular, for the first factor, “[c]ourts typically find a conflict with foreign law or policy when there is an ongoing trademark dispute or other proceeding abroad.”

Overall, claims of trademark infringement beyond the United States borders are viable, you just need to make sure you go through the well-defined prongs.

This article is provided for informational purpose only and is not intended as a form of legal advice. If you have any questions on the subject matter of this article, call Roland Tong, at 949-298-6867 or email Mr. Tong at [email protected]. Mr. Tong has been obtaining patent, trademark, copyright, and trade secret protections for his clients since 2001. He has represented a wide range of clients from start-up companies to Fortune 500 companies in a wide range of industries.